India is now not only a Foreign Aid grabber, Indian government provides foreign aids to poor nations too.^[1] Here is a discussion about how valid the idea of aiding poor nations is.
In 2003, Indian government took an ostentatiously brave step of denouncing the Idea of Foreign Aid and announced that India will discontinue taking grants aid from many countries. It was a positive step.
After the situation of economic bankruptcy, India faced during the crisis of 1991, Indians took off from their chosen path of socialism and adopted for economic reforms, liberalization and opening of markets towards the creation of free-markets. Obviously, it was result of that effort that within 12 years, Indian government was in position to denounce some of major foreign aids. No better evidence of failure of socialism and success of Capitalism is possible. Indian government urged that if foreign government wish, they may help NGO’s or foreign investors rather than granting aids for Indian government.
Foreign aid is a socialistic program, which runs world wide, and obviously, it fails every where.
So let us discuss why those huge amounts of money, which Indian government got from foreign countries to improve Indian conditions, suffered a complete set-back.
History teaches us that foreign aid always hurts the recipient country in long run.
The reason being Foreign Aid goes from government to government, which makes it strictly socialistic system. As it is a fact that socialists cannot calculate, they cannot plan nor they can discover or invent any system to provide a procedure of allocating optimum investment and optimum production, the failure of foreign aid is very probable. A big chunk of Foreign Aid goes for providing immediate consumptions that in effect, does not increase the productivity of the nation or its citizens. As it has been proved, that the only way to remove or reduce poverty, is to increase productivity, maximum part of Foreign Aid helps nothing for removing poverty.
The rest of the foreign aid goes in governmental five-years plan, state owned airlines, governmental hydroelectric plants and dams, etc which are raised principally for showcasing progress without any regards of their actual usability and worthiness.
Swaminathan Aiyer in his report at Times of India^[2] mentioned how horribly failure government plans and policies are in the water resource programs and how government is causing wastage and scarcity of water. All such huge government projects remain dependent on foreign aid, which ultimately turn out to be a burden on the receiving nation.
Along with foreign aid, government wastes man-power and local resources too in such big projects, hence the economic growth is further retarded, and poverty further increase. If foreign aids are provided without conditions, they are mostly squandered and misused. An example of this fact was the misuse of the foreign aid given by UNO to Indian government to increase awareness about health care and HIV AIDS. In 2007, UNO complained of extreme corruption in the handling of foreign aid.^[3] Thus, foreign aid not only increases poverty (while they are meant to reduce poverty) they causes enough space and possibilities of corruption and degradation of moral of the citizens of the nation.^[4] As there is obviously a need to manage and redistribute the foreign aid, it increases the bureaucratic burden on nation too. As most of the bureaucratic works are “non-productive-activities”, they further increase consumptions without increasing any productivity hence further cause poverty.
On the other hand, if anyhow the foreign government tries to impose conditions to provide a way to reduce wastage, the recipient government opposes it as an imperialistic attempt. Thus, foreign aids are always deemed to be a failure.
In the end of 2008, Pakistan faced the economic downturn and demanded foreign aid, and Pakistan got it too. It obviously suggests that, although Pakistan got foreign aid to help its present condition, the foreign aid will not be helping Pakistan for long, just as foreign aids never helped India ever.
Foreign Investment on the other hand is just opposite to foreign aid system, and most of the economic progress and reduction of poverty in India is actually a result of economic reforms and facilitation of foreign investment.
Foreign investment is the voluntary investment of foreign entrepreneurs in a backward nation at their own risks for their own profits. As foreign investment is individual or enterprise responsibility, it involved lesser or no chances of corruption, wastage and squandering of resources. Furthermore, foreign investment increases the productivity of the citizens as it creates jobs and possibilities for innovations. Above that, foreign investment also helps the native citizens to learn new technologies and develop them further to create their own native niche technologies, which in turn helps the foreign investors too. Thus, Foreign investment not only helps the recipient nation in reducing poverty by increasing productivity, but it also increases the development of technology, knowledge and learning processes and hence, the comfort, thus decreasing the poverty, and over that, it provides the foreign investors to increase their capital honestly.
Thus, while foreign aid is disastrous for the providing nation and recipient nation both, foreign investment is profitable for the investors and recipients both. That is, if Pakistan needs to improve its economic situation, it has to provide profitable and conducive circumstances for attracting foreign investors to increase the productivity of Pakistani workers in order to remove or reduce poverty.
Foreign aids actually hurt the aid provider nations too as they looses their capital in almost non-productive ways. Now government does not create wealth, be it foreign government or our own. So the tax-payers of the other nation also feel as if they were robbed. As for example, UK citizens complained about British foreign aid to India in 2008.

May we have our money back, please? Specifically, the £1 billion we donate in aid to India, a country rich enough to enter the space race.^[5]

The above discussion establishes that it is beyond any doubts that India suffered because of foreign aids, not only the government squandered the foreign money, but also it caused the national debt and fiscal deficits too. It is also an established and well-proven fact that voluntary foreign investment always helps and reduces poverty on sides of the recipient and the provider too.
So why is Indian government involving Indian Tax-Payers money in donating as Aid for other poor nations? Why not let Indian entrepreneurs and investors provide investment rather than looting Indian tax-payers and providing the robbed money to others to waste it? Why cannot we learn from our own mistakes?
For any government, providing aid to poor nation is more a cause of making impressions and false superiority, but such falsified superfluous acts increases poverty alone. Providing aid to poor nation on account of tax-payers hard earned money is just like making a new Statue of Shivaji to show how impressive a political party is.^[6]
Indian tax-payer individuals must oppose any move by Indian government about providing aid to any other nation. Better is providing a free market environment to facilitate investment by Indian entrepreneurs to those poor nations.
Indian government at present is providing aid to Nepal, Bhutan, Srilanka, Burma, Afghanistan and Bangladesh.^[7] Such aids surely cause wastage and will increase corruption and poverty. A much Better way to reduce poverty of the Indian sub-continent is, providing a free-market zone in Indian sub-continent, which will inspire and invigorate Indian entrepreneurs, investors and businesspersons to provide foreign investment to those poor countries and hence reducing poverty of whole Indian Sub-Continent.

1. India providing Foreign Aid to poor nations [↩]
2. Wasting $50 Billion on Major Irrigation, Times of India [↩]
3. World Bank Slams corruption on Aided, Indian health Care project [↩]
4. Welfare and Embezzlement, Reason for Liberty [↩]
5. A Complain against UK Foreign Aid to India [↩]
6. Indian version of Statue of Liberty, Reason for Liberty [↩]
7. Indian Foreign Aid Budget, pdf document [↩]